Wall St. cash flow imperils Democrats

A shift in the flow of Wall Street money toward Republicans earlier this year has become a torrent in the final weeks of the campaign, according to lobbyists and business executives doling out the cash.

“Our target ratio for the 2010 cycle is 80-20 Republican,” said Karen Klugh, spokeswoman for the American Financial Services Association.

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It’s a striking departure from the 2008 cycle, when the association’s members, representing a broad swath of the finance industry, split their donations roughly evenly between Democrats and Republicans, she said.

The financial industry’s turn on the administration and its allies in Congress sheds light on the tattered relationships left in the aftermath of the economic meltdown and the government’s response to it. The vilification of bankers, what one bank lobbyist called the “show trials” of congressional hearings and especially the outcome of financial regulatory reform has prompted an all-out effort to wrest Congress from Democratic control, several financial industry insiders told POLITICO.

“AFSA contributes to candidates that we believe will foster an economic environment that supports the sustainable growth of our members,” Klugh said. “But much like the American electorate at large, our ratio this cycle reflects our deep concerns with the work of the 111th Congress.”

Some Democratic lobbyists for the financial community said a shift in donations was inevitable, given the industry’s longtime Republican leanings. But the sheer volume of it could tip the scales in some races.

Take the case of Ohio Democratic Rep. Mary Jo Kilroy, a targeted freshman who sits on the House Financial Services Committee — an appointment that typically prompts a windfall of donations from Wall Street.

Kilroy is running against Steve Stivers, a former bank lobbyist who has raised nearly four times as much money from the financial industry as the incumbent, who sat on the conference committee that finalized the financial regulatory reform law.

According to the Center for Responsive Politics, Kilroy has received about $35,000 from banks, investors and others in the industry, compared with the roughly $133,000 that has been donated to Stivers. Kilroy’s camp has a simple explanation for the disparity: Stivers is one of them.

“That is the agenda he would bring to Washington. That is why they are so eager to cut him checks.” Stivers’s campaign spokesman, John Damschroder, counters that Kilroy “gets her money from big labor union bosses, ambulance-chasing trial lawyers and liberal special interests. Time and time again she has alienated the business community in central Ohio with her job-killing, big-taxing, mandate-supporting votes. That’s why there is a disparity.”

But Stivers is campaigning on a pledge to support changes in the law, a position heartily embraced by the financial sector. “There’s an eagerness by some in the industry to roll back Dodd-Frank ... and go after parts of it before it takes root,” said a Democratic financial services lobbyist.

House Minority Leader John Boehner (R-Ohio) promised to do just that late last spring when he met privately with Wall Street executives and lobbyists and urged them to get behind Republican candidates. The pace of giving has accelerated as the GOP prospects improved.